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Cultural Conflict and Merger Failure: An Experimental Approach

36 Pages Posted: 16 Aug 2001  

Colin Camerer

California Institute of Technology - Division of the Humanities and Social Sciences

Roberto A. Weber

University of Zurich - Department of Economics; CESifo (Center for Economic Studies and Ifo Institute)

Date Written: 2001

Abstract

We use laboratory experiments to explore merger failure due to conflicting organizational cultures. We introduce a laboratory paradigm for studying organizational culture that captures several key elements of the phenomenon. In our experiments, we allow subjects in "firms" to develop a culture and then merge two firms. As expected, performance decreases following the merging of two laboratory firms. In addition, subjects over-estimate the performance of the merged firm and attribute the decrease in performance to other subjects rather than to situational difficulties created by conflicting culture.

Suggested Citation

Camerer, Colin and Weber, Roberto A., Cultural Conflict and Merger Failure: An Experimental Approach (2001). USC CLEO Research Paper No. C01-10. Available at SSRN: https://ssrn.com/abstract=276288 or http://dx.doi.org/10.2139/ssrn.276288

Colin F. Camerer

California Institute of Technology - Division of the Humanities and Social Sciences ( email )

1200 East California Blvd.
Pasadena, CA 91125
United States
626-395-4054 (Phone)
626-432-1726 (Fax)

Roberto A. Weber (Contact Author)

University of Zurich - Department of Economics ( email )

Zuerich, 8006
Switzerland

CESifo (Center for Economic Studies and Ifo Institute) ( email )

Poschinger Str. 5
Munich, DE-81679
Germany

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